The yuan halted a three-day slide after China’s central bank raised its reference rate for the first time since Tuesday’s devaluation and said it will intervene to prevent excessive swings.
The onshore spot rate was little changed at 6.4003 per dollar as of 12:56 p.m. in Shanghai, after falling 3 percent this week. The People’s Bank of China said Thursday there’s no basis for depreciation to persist and that it will step in to curb large fluctuations. It followed up with a 0.05 percent strengthening of its daily fixing on Friday, after three cuts of more than 1 percent each.
China’s first major devaluation since 1994 surprised global investors and fueled concern that authorities are struggling to combat a slowdown in the world’s second-largest economy. Policy makers are trying to balance the need for financial stability against a desire for stronger exports and the yuan’s inclusion in the International Monetary Fund’s basket of reserve currencies.
“The PBOC sent its signal and people understand it’ll be very difficult to go against the PBOC’s will,” said Ken Peng, a Hong Kong-based strategist at Citigroup Inc., the world’s biggest currency trader. “The central bank will frequently intervene in the foreign-exchange market in the next three months because it needs to ensure the yuan is stable.”
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.
Dean Popplewell
He has a deep understanding of market fundamentals and the impact of global events on capital markets.
He is respected among professional traders for his skilled analysis and career history as global head
of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean
has played an instrumental role in driving awareness of the forex market as an emerging asset class
for retail investors, as well as providing expert counsel to a number of internal teams on how to best
serve clients and industry stakeholders.
Latest posts by Dean Popplewell (see all)
- Euro zone bond yields sink as German manufacturing slows - 24 July 2019
- How Boris Johnson Plans to Deliver Brexit in 100 Days - 24 July 2019
- Weak PMI’s Sink EUR - 24 July 2019